Calculate your Corporate Tax

When you establish your business, it is crucial to determine the Financial Year End (“FYE”), which is the annual period for which a company’s accounts are closed. Not only does the FYE signify the completion of the 12-month accounting period for your company, but it also helps your company to prepare the annual financial statements.

Please contact our consultants if you are not sure about your FYE.

A company’s assessable profits are taken into consideration to determine net profits arising in or derived from within the jurisdiction for the basis period. However, it does not include profits arising from the sale of capital assets.

Assessable profits do not include:

• Interest on Tax Reserve Certificates
• Dividends subject to local profits tax and received from a corporation
• Income from interest and trading profits sourced from long-term debt instruments

Please contact us for more information.

In Hong Kong, profits tax exemption is available on eligible onshore and offshore funds generated within the jurisdiction. Here are some examples of tax incentives:

• Concession on mutual funds and trusts
• Capital spent on the renovation of business premises during the 5-year write-off period.
• Investment in a manufacturing or production business of high value. This exemption extends to any cost of purchasing new plant and equipment related to manufacturing. It also includes hardware and software owned by end-users.
• Capital expenses incurred on any environmentally friendly vehicles and machinery.
• Profits tax deduction for capital spending on the purchase of environmentally friendly vehicles, effective from the assessment year 2010-11.
• All funds operating in Hong Kong are eligible for profits tax exemption on transactions, effective since 1 April 2019.

If you wish to have a precise tax incentive evaluation of your company, please contact us.

The annual profit tax filing due dates are different accounting to the accounting dates (i.e. the date of commencement on Business registry Certificate) of the companies:

• Accounting date between 1 April to 30 November: 30 April
• Accounting date between 1 to 31 December: 31 August
• Accounting date between 1 January to 31 March: 15 November

All profits tax returns are submitted to the Inland Revenue Department (IRD) within one month of issuance. The returns depend on the type of your business:

• Non-Resident Persons (BIR54)
• Corporations (BIR51)
• Persons other than Corporations (BIR52)
• The date of submission is mentioned on the first page of the return. For electronic filing, the deadline may be extended by 2 weeks.

For some, the one-month deadline is insufficient to finish their profit tax return form. But luckily, a company can request for an extension. The IRD will send out a Circular Letter at the start of the year to inform representatives about the Block Extension Scheme.

It includes programs for block extension and notifications of detailed updates.

A further extension of time beyond the Block Extension Scheme extended due dates will be given only in the most extraordinary situations.

Any such request should be given in writing, together with an explanation of why the procedure cannot be completed in a timely manner and supporting documentation.

A fine is imposed if a legal entity fails to comply with its tax duties. For instance, this could be failing to keep adequate records of income and spending, filing an erroneous return without fair cause, or failing to comply with the requirements of the notice.

The penalties and fines vary. The highest penalty is HK$50,000, a fine of three times the undercharged and three years in prison.